Nirav Modi team had a free run at PNB; CBI quizzes Firestar's Vipul Ambani

Activists of the youth wing of the Congress hold a cut-out of jeweller Nirav Modi during a protest in the national capital. Photo: Reuters
The two detained Punjab National Bank (PNB) officials under the Central Bureau of Investigation’s (CBI’s) custody said Nirav Modi’s team was given “unauthorised access” to PNB’s computer systems for a “commission” on every letter of undertaking (LoU) issued, said a probe agency source.  

On Saturday, the CBI had arrested three people, including PNB’s former deputy manager Gokulnath Shetty, the bank’s single-window operator Manoj Kharat, and Hemant Bhat, authorised signatory for Nirav Modi’s firms. A special court remanded all the three accused in 14 days’ CBI custody. 

During interrogation, the arrested bank officials revealed they had provided their account details and passwords to Modi’s staff, who would log into the SWIFT system illegally as PNB officials and gain access to the systems, in the capacity of verifier/authoriser and log the fraudulent SWIFT messages, said a CBI source.  

According to the source, the accused were taking commission, which was a fixed percentage on every LoU, for unauthorised access and SWIFT password to the Modi firms. The amount was split among the PNB employees involved in the fraud. The involvement and connivance of more staff members and outsiders was revealed during questioning,” said the source. The accused have revealed names of at least half a dozen more PNB employees involved in the scam. 

The funds raised through the LoUs were meant to be issued for paying import bills of the accused companies, whereas they were dishonestly and fraudulently utilised for discharging the earlier liabilities on account of the buyer’s credit facilities allowed by the overseas branches of an Indian bank. 

The CBI also called Vipul Ambani to its office with documents. Ambani is president-finance in Modi’s flagship firm, Firestar International, since April 2014. He is also the son of Dhirubhai Ambani’s youngest brother Natubhai.

The central agency had also called 10 of the 18 PNB employees suspended for suspected involvement in the Nirav Modi (pictured) scam on Sunday.

The CBI spokesperson said that searches were conducted at PNB’s Brady House branch on Sunday, where five officials at the level of deputy general manager and above were examined. The agency also said it had examined officials from Nirav Modi’s companies. 

The central agency has also written to all banks, asking them to report irregularities in their LoU and foreign letters of credit (FLC). 

Sources said the CBI was in possession of all the LoUs sanctioned or issued by banks, and is scrutinising them. 

According to a CBI official, the loss could have been higher than Rs 114 billion since several LoUs will mature in May. “Some of these are 180-day LoUs. We are checking the amount involved in these LoUs,” he said.

In the case of FLCs, they were opened initially for smaller amounts by creating purported entries in core banking solution system and sending the relevant FLC through SWIFT messages. Meanwhile, the CBI has sought help from authorities all over the world through Interpol to locate Nirav Modi, and airports have been informed through a diffusion notice. If Modi flies from one country to another, the CBI will be informed. At present, there is no concrete information on Modi’s whereabouts, CBI sources said. 

So far, LoUs of Rs 51.66 billion were identified, according to the CBI’s first information reports. However, during the court proceeding on Saturday, the CBI said the amount involved in these would likely be in the vicinity of Rs 60 billion.

Search operations by the Enforcement Directorate (ED) against both Modi and Choksi continued for the fourth day on Sunday. On Sunday, the ED searched 47 places across the country. Also, the agency issued its second summons to Choksi, Modi, their relatives, and three other associates. So far, the enforcement agency has seized diamonds and jewellery of Rs 56.74 billion. 

At least 200 shell firms and benami assets have come under the scanner of the investigative agencies, said the Press Trust of India. The ED and the income tax department found that these shell companies in India and abroad were being used to route or receive funds, launder money, and create benami assets in the form of land, gold, and precious stones, which is now being probed by the tax department. 

While some of the company officials have been questioned and the statement has been recorded, the ED also questioned some PNB officials who informed the agency that Modi’s brother refused to make the payment of outstanding dues when he was approached by the bank. Bank officials claim this had prompted the bank to file a complaint with the CBI.

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